New Bottom Line Volume 3.20 – Green Procurement

October 18, 1994

As a company chooses to make a serious commitment to environmental quality and efficiency (EQE), it takes on a series of new challenges, including not only “greening” its own operations, but also those of its suppliers. In order to be able to stand behind any product claims, which must ultimately affect the “cradle-to-crave” environmental impacts of the product–its design, manufacture, use and disposal–a company must in effect be able to stand behind its vendors’ product claims as well.

At a recent panel on Greening the Supply Chain at the national conference of Business for Social Responsibility (an 850 member national trade association), representatives of companies as diverse as Steelcase (office furniture), Aveda Corporation (personal care products) and American Airlines and discussed their challenges and accomplishments in improving the environmental performance of their suppliers.

There are three key steps to consider in your company’s efforts to move EQE up the supply chain: modifying your purchasing process, to ensure you buy the quality you want; working with your suppliers to improve their EQE; evaluating or auditing your suppliers, to ensure that quality is maintained. (As with most environmental initiatives, buy-in from senior management will be essential to effectively launch and sustain the program.)

The first step is to identify what vendor EQE expectations are important to your firm. Most green purchasing programs start with recycled content (as addressed in my last column)–what percentage of a product, and/or its packaging, are made from recycled materials? But there are other environmental specifications you might also look for:

Is the product, by virtue of both design and component materials, readily recyclable?

Has your supplier made systematic efforts to increase energy efficiency, and to minimize waste generation?

Are hazardous materials used in its production, or have they been “designed out” of the process?

Does your supplier comply with all applicable environmental regulations?

Do they have a systematic environmental management program?

Next, your purchasing staff needs to be supported in putting the program into practice. American Airlines’ five step program includes educating their “commodity managers” about environmental purchasing criteria, and their significance; offering their buyers a “buy recycled” challenge; providing them with resources on products and environmental specifications; publicizing their efforts within the company; and rewarding success.

Be sure to develop needed tools like clear specifications and understandable checklists for either buyer or vendor to complete. Modify your purchasing database so you can track results you choose to reward. And ensure ongoing interaction between purchasing, product design, sales and customer service to ensure needed feedback and learning to support continual improvement of both environmental quality and product quality.

While large purchasers can perhaps overcome vendor resistance by brute force–“these are our quality standards; meet them if you want to sell to us”–it’s often more productive for both parties to see this as an opportunity for collaboration, to help each other improve both quality and profitability. Help your suppliers understand why EQE is important to your company, and how it can be valuable to them (greater ecoefficiency, appeal to their other clients, etc.)

Because your firm has already dealt with many EQE issues, you’re in a unique position to help your suppliers understand the technical issues, develop or improve their environmental initiatives, and integrate them into their firm, as you’ve done in yours.

Finally, as part of your own company’s efforts to earn market recognition for its environmental quality and efficiency efforts, you may want to seek formal certification of EQE (whether under existing private eco-labeling programs like Green Seal and Green Cross, national programs like Japan’s “Eco-Mark”, Canada’s “Environmental Choice/Choix Environnemental”, or Germany’s “Umweltzeichen weil”, or under emerging international standards like ISO 14000). As part of such efforts, you may want to–or need to–encourage your suppliers to undergo formal EQE evaluation of their own. They could conduct their own periodic environmental audit, your purchasing or EH&S department could audit them; or you could require a third party audit. (Disclosure: the author’s firm conducts integrated ecoaudits focusing on EQE.)

However you approach it, it is increasingly clean that environmental claims matter in the marketplace, and that environmental performance matters even more. Since your supplier’s environmental performance is “embodied” in your own company’s products, it’s a good idea to bring them along with you, as you improve your own company’s EQE.

(c) 1994 Gil Friend. All rights reserved.

New Bottom Line is published periodically by Natural Logic, offering decision support software and strategic consulting that help companies and communities prosper by embedding the laws of nature at the heart of enterprise.

Gil Friend, systems ecologist and business strategist, is President and CEO of Natural Logic, Inc.

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